EM Consumers: Carrying More of the Load

July 23, 2018 |Author: Edward Kerschner, CFA | Categories: Chart of the Week, Emerging Markets

Changing dynamics of global consumption. Consumption’s share of gross domestic product (GDP) has more than doubled in emerging market (EM)1 countries from 11% to 23% between 2000 and 2016, according to a recent Credit Suisse report.2 During that same time, it eased in developed countries (G63) from 66% to 50% and by 2050 consumption will be a greater share of GDP in those EM countries than developed countries. The report said that, “these trends will continue to dominate the next decade and beyond, with emerging markets contributing the most to consumption spending growth.”

Structural development of EM consumers. The report noted three key factors working in favor of emerging markets – superior demographics, urbanization trends and rising income. A combination of stagnant demographics and low-income growth will weaken the contribution from consumer growth to developed markets.

1 Selected emerging market countries are Brazil, China, India, Indonesia, Russia, Mexico, Turkey and South Africa.
2 Credit Suisse – Emerging Consumer Survey 2018, March 2018.
3 Selected developed countries are France, Germany, Italy, Japan, United Kingdom and the United States.

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